A former president of the Chattered Institute of Bankers of Nigeria (CIBN), Mr. Okechukwu Unegbu, has said that the Central Bank of Nigeria (CBN) will need to do everything within its power to get rid of unethical digital lenders, otherwise known as loan sharks, because they are dangerous to the economy.
Unegbu, who stated this in an interview with the News Agency of Nigeria (NAN) on Sunday decried the proliferation of digital lenders in the Nigerian financial system.
He urged the CBN to empower Microfinance Banks (MfBs) to be more functional in their lending role to small businesses to eliminate the menace of loan sharks.
Unethical practices
Highlighting some of the unethical practices of digital lenders, Unegbu said:
- “These loan sharks are dangerous to the economy, and the CBN should do everything to eliminate them. They give loans to people and when there is a default they call all contacts on their phone to embarrass them; it’s unethical.
- “The MfBs are better positioned to offer such service, and I’ll urge the CBN to empower the MfBs to be able to carry out their mandate more effectively.”
The activities of the digital lending platforms were often not in conformity with the CBN consumer protection regulation which mandates financial institutions to ensure that debt recovery processes are transparent, courteous, and fair.
The apex bank said that the process must be devoid of undue pressure, intimidation, harassment, humiliation, or threat.
During a recent Monetary Policy Committee meeting, the suspended CBN governor, Godwin Emefiele, had expressed displeasure in the way loan sharks handle customers who defaulted.
“If you go to a loan shark to borrow, you will pay two or three times the amount in 90 days. When you refuse to pay, they will seize your property; bicycle, or television just to collect N200,000,” he said.
He however said regulating the loan sharks was a challenge since they were mostly in rural areas and unregistered. “Moreover, the CBN is not a law enforcement agency like the police,” he had said.
Loan apps defy FCCPC.
Nairametrics recently reported that despite the efforts of the Federal Competition and Consumer Protection Commission (FCCPC) to sanitize digital lending space through registration, harassment, and defamation of borrowers have continued.
Some of the loan apps registered by the FCCPC continue to defame their customers through the usual practice of sending messages to contacts of their debtors. This also contradicts a recent Google policy forbidding loan apps from accessing their customers’ photos and contacts.
While Google is collaborating with the FCCPC to ensure that loan apps in Nigeria adhere to ethical standards, apps currently listed on the Google Play Store are still among the culprits according to findings by Nairametrics.
Those loan sharks due to their threats have mentally, emotionally and and even physically dealt with their borrowers. I had a situation where I borrowed from palmcredit ₦20,000 which I was supposed to pay back within 15days and one thing lead to another I didn’t see any means of paying them within the state period. I wrote them a Mail explaining my situation that since I can’t meet the dead line they should please give grace till month end then I’ll pay them back. Within 15days of default there’s was no threats I didn’t received from palmcredit regarding repayment with excessive service charges according to them. This was a loan I was supposed to repay ₦24,000 with interest I end up paying ₦30,000 because of 15days default. They’ll insult you, cursed your entire family just because they want their money back.
This sharks should be eliminated on the surface of the Earth.
I hate them with passion.
When I borrowed even bigger amount from UBA it was a Cool ride compared to this so called online lenders.
I hate this guys.
For Okash, they start adding 1,500 daily if you refuse to pay in time. Joy Cash promised to damage my reputation if I don’t pay them immediately. Their interest rates are very high. Okash loaned me 156,000 and taking back 226,000 within three months. Please where is this heard of in all the world?
This project is good
Microfinance banks are loan sharks charging 10percent percent per month or 120 percent per year. How would an economy develop at such interest rates. We are not getting it right at all.
The activities of this loan sharks is dangerous to the Nigeria banking public, the harassment, intimidation and inhuman treatment from this irresponsible institution most be dealt with or services suspension to stop or curtail rascality.
Microfinance banks or online loan sharks. They are all the same